tv Treasury Secretary Says Tax Plan Will Eliminate Most Personal Deductions CSPAN April 27, 2017 6:34am-7:01am EDT
president trump's tax proposal tax code.ed for a new this includes in the elimination of all of the deductions except more just interest and charitable deductions for individuals. the reduction of tax brackets from seven to three. and in repeal of the alternative minimum tax and death tax. for businesses and corporations, the administration wants a 50% tax rate. here is the announcement from treasury secretary steve mnuchin as a economic council director gary cohen. -- gary cohn. sean spicer never thought so : many people would be turning out for the iniquities act. >> good one. sean spicer i had to use it. : we're here to talk about the president's effort to provide tax relief to our corporations
that will help grow jobs and middle americans. two people to explain it, gary cohn is going to walk through why we're doing and what we're doing then the personal side. and secretary of the treasury stephen mnuchin will walk through the business and corporate side of what the president is doing to bring jobs back to this country, to make our businesses more competitive and help our economy grow. at the end, we'll be glad to take questions on this. you are being provided a one pager that provides the top level of the plan and both the director and secretary will go into further detail. so without further ado, director gary cohn. mr. cohn: thank you, sean. good afternoon to everyone. thank you for being here. this is quite an historic day for us and one that we've been
looking forward to for a long time and one we're very excited about. we have a once in a generation opportunity to do something really big. president trump has made tax reform a priority and we have a republican congress that wants to get it done. this is something that, quite honestly, i hope the democrats would support too, because it's good for the american people. the president is going to seize this opportunity of tax reform and one of the biggest tax cuts in the american history. we have been working on this for a long time. we've had great meetings, we had a great meeting last night with the leadership of the house and the senate. we've agreed on many of the important principles of tax reform. we look forward to working together with the house and the senate very closely in the weeks ahead. the president has focused on three things since his campaign. job creation, economic growth and helping the low and middle income families who have been left behind by this economy.
he understands there are a lot of people in this country that feel like they work hard and they just cannot get ahead. they are sick of turning their paychecks over to washington and having no idea of how those dollars are spent. they are frustrated by a tax code that is so complicated they can't even do their own taxes. that's why tax reform is such a big priority to this president. he cares about making the economy work better for all american people. here's a little history. when president kennedy cut taxes in the early 1960's, the top rate on personal income was over 90% and there was rampant tax avoidance.
then, 20 years later, president reagan took rates down to 28% for individuals. since then, rates have been creeping back up and more loopholes and special interest tax breaks have made their way back into the tax code, disadvantaging average americans. then on the business side, when president reagan left office in 1988 the corporate tax rate was 34%. and it hasn't changed much since. for the last 25 years, other countries have been aggressively cutting their tax rates and moving to a territorial system in order to attract business. and the u.s. has done none of that. in 2017 we are still stuck with a 1988 corporate tax. that's why we are now one of the least competitive countries in the developed world when it comes to corporate tax. so tax reform is long overdue. we are going to cut taxes for businesses to make them competitive. and we're going to cut taxes for the american people, especially low and middle income families. today, i'm going to outline the principles we have put in place for personal tax reform. and then i'm going to hand it over to secretary mnuchin to talk about the business side.
first, a few statistics for you on the individual side. in 1935, we had a one-page tax form consisting of 34 lines with two pages of instructions. today the basic 1040 form has 79 lines and 211 pages of instructions. instead of a single form, the i.r.s. now has 199 tax forms on the individual side of our tax code. taxpayers spend nearly seven billion hours complying with these tax codes every year. and nearly 90% of taxpayers need some help in filing their taxes. we are going to cut taxes and simplify the tax code by taking the current seven tax brackets we have today and reducing them to only three brackets. a 10% bracket, a 25% bracket, and a 35% bracket.
we're going to double the standard deduction so that a married couple won't pay any taxes on the first $24,000 of income they earn. in essence, we are creating a zero tax rate, yes, a zero tax rate for the first $24,000 that a couple earns. the larger standard deduction also leads to simplification. because far fewer taxpayers will need to itemize. which means their tax form can go back, yes, to that one simple page that i talked about earlier. families in this country will also benefit from tax relief to help them with child and dependent care expenses. we are going to repeal the alternative minimum tax. the a.m.t. creates significant complications and burdens which require taxpayers to do their taxes twice to see which is higher. that makes no sense and we should have one simple tax code.
as we all know, job creation and economic growth is the top priority of the administration. nothing drives economic growth like capital investment. therefore, we are going to return the top capital gains tax rate and dividend rate to 20%, repealing the harmful 3.8% obamacare tax on dividends and capital gains. that tax has been a direct hit on investment income and small business owners. we're going to repeal the death tax. the threat of being hit by the death tax leaves small business owners and farmers in this country to waste countless hours and resources on complicated estate planning to make sure their children aren't hit with a huge tax when they die. no one wants to see their children have to sell the family business to pay an unfair tax. we are going to eliminate most of the tax breaks that are mainly benefits to high-income individuals. home ownership, charitable
giving and retirement savings will be protected. but other tax benefits will be eliminated. this isn't going to be easy. doing big things never is. we will be attacked from the left and we will be attacked from the right. but one thing is certain. i would never, ever bet against this president. he will get this done for the american people. with that, i'm going to turn it over to secretary mnuchin to go through the business tax plan and then we'll both come back and take questions. mr. mnuchin: thank you. we have been working on this plan for a very considerable period of time. our objective is to make u.s. businesses the most competitive in the world. right now we have a 35% corporate rate on worldwide
income and deferral. it is perhaps the most complicated and uncompetitive business rate in the world. not a surprise companies leave trillions of dollars offshore. under the trump plan, we will have a massive tax cut for businesses and massive tax reform and simplification. as the president said during the campaign, we will lower the business rate to 15%. we will make it a territorial system. we will have a one-time tax on overseas profits, which will bring back trillions of dollars that are offshore to be invested here in the united states, to purchase capital and to create jobs. the president is determined to unleash economic growth for businesses. this is not just about large corporations. small and medium sized businesses will be eligible for the business rate as well. as gary said, we have had very
productive meetings with the house and senate, working weekly to get this done. we will continue to do that, we are determined to move this as fast as we can and get this done this year. i would also just comment that we will hold listening sessions. one thing this president has done very well is listen. we've had hundreds of business leaders here from all different types of areas. manufacturers, retail, airlines, community banks, big banks. we are listening and we have been taking feedback. finally, i would just add the president's objective is creating economic growth. and as we've said before, we believe we can get back to 3% or higher g.d.p. that is sustainable in this country. the overall economic plan consists of massive tax cuts and tax reform. regulatory relief. and renegotiating trade deals.
with that we will unlock the economic growth that's been held back for too long in this country. with that we'd be both happy to take a few questions. in the back. reporter: when you talk about the individual tax rates, you're also talking about eliminating some of the tax breaks. are you talking about eliminating tax deductions? which one are you talking about eliminating and which ones are you talking about keeping? mr. mnuchin: correct. we'll eliminate on the personal side all tax deductions over other than mortgage interest and charitable deductions. we think that will be sweeping reform. reporter: when you talk about lowering the -- [inaudible] -- how does that mesh with what you said this morning about protecting the middle class from the very, very wealthy who might be able to take advantage of -- i don't expect the word loopholes but that would give them a lower tax rate?
mr. mnuchin: what we've said is the business rate will be available for small and medium sized businesses, as well as corporations. however, we will make sure that there are rules in place so that wealthy people can't create pass-throughs and use that as a mechanism to avoid paying the tax rate that they should be on the personal side. i would just say, on the dividend rate we believe that restoring the 20% capital gains rate is critical to investment in this country. reporter: a question about pass-throughs and all that. the initial plan that the president as a candidate outlined also includes freelance or contract workers in that 15%. what's your rate on repatriation of funds overseas and -- [inaudible] -- what about the marriage penalty? mr. cohn: first i'd comment on the rate of repatriation. we're working with the house and senate on that. but i will say, it will be a very competitive rate that will bring back trillions of dollars. as it relates to the definition of contractors and things along
those lines, again, those will be the details we will be working with congress on as we turn this into a bill that would get signed by the president. mr. cohn: as the secretary said, we are working very diligently with the house and senate, coming up with final details of the bill. you're going into very micro details. reporter: very important ones. mr. cohn: we agree. very important. our basic premise here is to simplify the tax system. lower rates. and make it easy. we don't want to penalize people. we want to make the system very fair. that is one of the things on our list that we're going to work on just as secretary mnuchin said. we will get back to you with definitive answers on all these details. reporter: on the 10%, 25%, 35% rates, do you have income brackets established? mr. cohn: we are in constant dialogue with the house and senate. as the secretary said, we're holding a bunch of listening
groups right now. we have outlined, we have a broad brush view of where they're going to be. we're running on an enormous amount of data on the proposals right now. we will be back to you with very firm details. we're very confident where they're going to be. we just want to get it out and a broad brush overview of where we are. the president believes in taking input over the next month. we've got a lot of different discussions going with a lot of different groups. reporter: you said deductions. does that mean state and local income taxes being eliminated? mr. cohn: yes. reporter: either one of you, when you talk about repealing the 3.8% obamacare tax, is this your first attempt, official first attempt, to start pulling back on obamacare? also, what do you say to your fellow republicans who say that this tax reform package is more
about corporations versus -- [inaudible] mr. cohn: this tax reform package is about growing the economy, creating jobs. it's about the economy. as i started, president trump comes in every day and talks to the two of us about economic growth, economic prosperity and jobs and what are we doing to stimulate economic growth. that's how we're looking at this plan. the 3.8% tax on capital gains, dividends and interest, the president looks at that very seriously as being a tax on capital, being spent to stimulate economic growth. people putting investment capital to work and people being taxed on their personal businesses. we're trying to get rid of that to be more stimulative, to have capital go back into the economy to create more jobs. reporter: it's more business than obamacare. mr. cohn: it's business. it's to
stimulate business investment. we are trying to stimulate business investment. reporter: first of all, does it pay for itself? is this plan revenue-neutral? secondly, what in here is non-negotiable? when this goes over to congress, congress comes back with a 20% corporate tax rate or something added in, will the president refuse to sign that? mr. mnuchin: let me first say, again, the core principles of this, we've been meeting with the house and senate and they agree 100%. the core businesses make business rates competitive, bring back trillions of dollars to create jobs, simplify personal taxes, create a middle income tax cuts. those core principles are non-negotiable. and that's something that we all feel strongly about. as it relates to will it pay for itself, again, i think as we've said, we're working on lots of details as to this. we have over 100 people in the treasury that have been working on tax and scoring different
scenarios. this will pay for itself with growth and reduced reduction of different deduction and closing loop holes. reporter: if it turns out that the congressional estimate -- [inaudible] -- in it turns out that it won't be paid for by growth, and won't get picked up, is the president comfortable with that? will he sign something? mr. mnuchin: when we look at the deficit and the deficit has gone from $10 trillion to $20 trillion in the last administration, that is a problem and the president is concerned about that. this plan is going to lower the debt to g.d.p. the economic plan under trump will grow the economy and will create massive amounts of revenues, trillions of dollars in additional revenues. let's go in the back. reporter: if you don't replace some of the revenue with the border adjustment tax, how will you make up for the deficit
caused by the reduction in the corporate tax rate? mr. mnuchin: again, today we're putting out the core principles which include rates, we think that's a very important part of the plan. we will be working very closely, as i said, with the house and the senate to turn this into a bill that can be passed and the president can sign. and there's lots and lots of details that will be going into how that will pay for itself. reporter: territorial tax system. is that a border adjustment tax? tariff? what is it? mr. mnuchin: territorial tax system means that u.s. companies will pay income on income-related to the u.s. so it's territorial. u.s. companies will not be subject to worldwide income, which has made them uncompetitive. reporter: is there a reason to be concerned that perhaps the republicans might not go along with this just like they didn't go along with the obamacare replacement? mr. mnuchin: i think there's a
lot of desire from everybody to pass tax reform. we are at a historic moment and republicans and democrats want to create jobs and want to help the american people and the core principles of this, we have agreement on and we will work forward on the details. let's go in the back. reporter: thank you, mr. secretary. quick question. you bring up repeal of the death tax. the estate tax. this is an issue that's been going on for decades. it used to be they were always talking about phasing out the death tax over a period of years. groups such as jim martin 60-plus, seniors association, said they wouldn't accept it and wanted immediate killing of the death tax. is that what this is going to be? or is it going to be a phase-out measure?
mr. cohn: right now our initial proposal is to to immediately phase-out the death tax immediately. with the implementation of the new tax, the death tax would disappear. reporter: two questions. this is obviously a statement of core principles. it's just one page. obviously tax reform is much more complicated. when will we see the actual plan? mr. mnuchin: we are moving as quickly as we can. we are working with the house and senate on all the details. everybody has an agreement, we are going to move this as fast as we can. when we have an agreement, we will release the details. reporter: will the president release his tax returns so that -- mr. mnuchin: the president has no intention.
the president has released plenty of information and i think has given more financial disclosure than anybody else. i think the american population has plenty of information on that. right there. excuse me. other people. other people have the right to ask questions. reporter: my question is to you, mr. secretary, or mr. cohn. you mentioned middle class tax cuts. middle class families watching this tonight on this news, a family of four, median income, $60,000, what does it mean for them? mr. cohn: it's going mean a tax cut. reporter: how much? mr. cohn: it's going to mean a tax cut. you're asking the same question we got asked over here. we will let you know the specific details at the appropriate moment. we are in very robust discussions with the senate, with the house leadership. they are progressing very quickly. and we will continue to give you more details as we have them. we are going to take 2 more.
reporter: then-candidate trump was asked if he believes in raising taxes on the wealthy. he said, i do, i do. including myself, i do. so my question is, why isn't he doing that? and will the president end up paying more or less taxes as a result of this plan? mr. mnuchin: let me comment. i can't comment on the president's tax situation, since i don't have access to that. but i would comment that our objective is the reduction in taxes will be offset by significant reductions of deductions in other items. so the effective tax rate is what we're focused on. one more question right here. reporter: you may not have seen the president's tax returns but according to our estimations, getting rid of the alternative minimum tax would save him $5.3 -- he would only have paid $5.3 million in federal income taxes. so your response to those critics who say a lot what have you've presented here today to could save the president or benefit his own businesses.
mr. mnuchin: what this is about is creating jobs and creating economic growth. and that's what massive tax cuts and massive tax reform and simplifying the system is what we're going to do. the a.m.t. is just another example of a third complicated set of rules. anyway, thank you, everybody. appreciate you guys being here. announcer: thursday, u.s. pacific commander harry harrison is back on capitol hill testifying about military strategy in the asia-pacific region focusing on north korea. follow live coverage from the armed services committee at 9:30 a.m. eastern on c-span3. andcan watch as c-span.org listen on the c-span radio app. announcer: saturday, c-span's live coverage of this year's
correspondents dinner. the entertainment will be in senior correspondent at "the daily show." president trump will not attend the tenor making -- attend the dinner making him the first president to skip the annual gathering. live coverage at 9:30 p.m. on c-span. q&a, aer: sunday on washington political salon and foundation of america liberalism and we talked and arthur about a group of intellectuals, felix, walter lippman, wendell holmes junior, walter brandeis and herbert hoover who met in the early it in hundreds to debate politics and the future of the country. >> i think everybody associate with a house, hoover, brandeis, race was not a salient issue. they cared about the right of workers for you it took holmes junior in some of his opinions, including in 1923 case which
found for the first time that the mop donated criminal trials of southern blacks violated the due process, the first time the supreme court struck down a state conviction. it was a huge moment inputting fair criminal trials on the liberal agenda in. >> on c-span's queuing day. -- q&a. live on c-span, washington journal is next. at 10:00 a.m., the house returns for general speeches. the u.s. house takes of legislation to make fannie mae and freddie mac records subject to the freedom of information act. >> coming up in an hour, maryland congressman of proposed changes to the health care law. coleman onnie watson
the increase in immigration a.m., brianat 9:00 and peter of the national association of counties on the trump administration's impact on states and localities. ♪ host: here are your morning headlines this morning. from capitol hill, house republicans are inching closer to replacing obamacare. conservative members of the house freedom caucus said to be on board with the deal. gop leaders last night released a one-week stopgap funding bill to keep the government running past friday's deadline. at the white house yesterday the president's top economic guides revealed the first changes that trump would like to see to the tax code, with elimination of deductions.